Mauritius to walk the extra mile to prevent money laundering

Mauritius is willing to take all steps necessary to still India’s apprehensions over its territory being used for money laundering, a top Minister has said. .

Stating that the island nation was a transparent jurisdiction to do business with, Arvin Boolell, Minister for Foreign Affairs, Regional Integration and International Trade, said it wants India to speed up its decision on the Tax Information Exchange Agreement, which is expected to help both nations access information about entities doing business in their respective domains .

But, whether India will respond with the same urgency remains to be seen, as financial markets have always reacted to such decisions and the 2014 general elections are very much in sight. Given the current economic and political situation, observers say, the Indian government may not immediately decide on the issue.

Mauritius has already sent a request for holding a meeting at the earliest and signing of the agreement, Boolell said.

Genuine concerns on the issues will be addressed, he told visiting Indian journalists here. India fears that Mauritius is being used as the route to transfer illicit wealth to third countries. Boolell said the required checks and balances are in place and Mauritius would be willing to go the extra mile to plug loopholes, if any.

Revised pact

“We are a jurisdiction which has put in place all necessary precautions. This is the reason why OECD has stated emphatically that Mauritius is a neat and clean jurisdiction (to do business),” the minister added. Mauritius is even ready to allow Indian auditors access to the books of Indian entities using Mauritius as an investment destination, he said.

The two nations are also working towards the long-pending issue of revising the double taxation avoidance agreement.

Revision of the has been in limbo due to an amendment proposed by the Indian side, which was initially not acceptable to Mauritius. India had proposed to amend a provision in the treaty that dealt with capital gains tax, asking Mauritius to provide for source-based taxation of such capital gains.

India further proposed to incorporate a new proviso in the treaty ‘limiting the benefits’. Under this clause, only those companies that fulfil certain criteria, including the minimum expenditure norm in a tax haven country, will be allowed to enjoy tax benefits.

The issue of double taxation is said to have been taken up with the Mauritian side during bilateral talks on the sidelines of the recently concluded conference of trade ministers of the Indian Ocean Rim Association, where India’s Commerce and Industry Minister Anand Sharma is understood to have stated that this issue is being dealt with the Finance Ministry.

Mauritius is willing to consider insertion of appropriate clauses in the agreement to prevent any perceived abuse and, of course, in return has sought for no change in the proviso that deals with capital gains tax because certainty and stability in the operation of the agreement should not be overridden.“On limitation of benefits, we have submitted a proposal that is beneficial for both parties,” Boolell said.

“Mauritius always gives India the premium space...and what the two (countries) have done for information communication and technology sector, we want to replicate in the financial services sector,” Boolell said.

richa.mishra@thehindu.co.in

(The correspondent is on a trip sponsored by the Mauritius Tourism Promotion Authority.)

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